Head to Head Review: Warby Parker (NYSE:WRBY) versus CarMax (NYSE:KMX)

CarMax (NYSE:KMX) and Warby Parker (NYSE:WRBY) are both mid-cap consumer discretionary companies, but which is the superior business? We will compare the two companies based on the strength of their dividends, profitability, earnings, analyst recommendations, valuation, institutional ownership and risk.

Profitability

This table compares CarMax and Warby Parker’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
CarMax	0.84%	6.64%	1.53%
Warby Parker	0.85%	3.36%	1.72%

Volatility and Risk

CarMax has a beta of 1.17, indicating that its stock price is 17% more volatile than the S&P 500. Comparatively, Warby Parker has a beta of 1.91, indicating that its stock price is 91% more volatile than the S&P 500.

Analyst Recommendations

This is a breakdown of recent ratings and price targets for CarMax and Warby Parker, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
CarMax	3	15	2	0	1.95
Warby Parker	0	4	7	0	2.64

CarMax presently has a consensus price target of $51.67, suggesting a potential downside of 9.67%. Warby Parker has a consensus price target of $30.08, suggesting a potential upside of 33.62%. Given Warby Parker’s stronger consensus rating and higher probable upside, analysts plainly believe Warby Parker is more favorable than CarMax.

Institutional & Insider Ownership

93.2% of Warby Parker shares are held by institutional investors. 1.0% of CarMax shares are held by company insiders. Comparatively, 16.8% of Warby Parker shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock will outperform the market over the long term.

Earnings and Valuation

This table compares CarMax and Warby Parker”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
CarMax	$25.88 billion	0.31	$247.29 million	$1.53	37.39
Warby Parker	$871.91 million	2.79	$1.64 million	$0.07	321.63

CarMax has higher revenue and earnings than Warby Parker. CarMax is trading at a lower price-to-earnings ratio than Warby Parker, indicating that it is currently the more affordable of the two stocks.

Summary

Warby Parker beats CarMax on 10 of the 14 factors compared between the two stocks.

About CarMax

CarMax, Inc., through its subsidiaries, operates as a retailer of used vehicles and related products in the United States. It operates in two segments: CarMax Sales Operations and CarMax Auto Finance. The CarMax Sales Operations segment offers customers a range of makes and models of used vehicles, including domestic, imported, and luxury vehicles, as well as hybrid and electric vehicles; used vehicle auctions; extended protection plans to customers at the time of sale; and reconditioning and vehicle repair services. The CarMax Auto Finance segment provides financing alternatives for retail customers across a range of credit spectrum and arrangements with various financial institutions. The company was founded in 1993 and is based in Richmond, Virginia.

About Warby Parker

Warby Parker Inc. provides eyewear products in the United States and Canada. The company offers eyeglasses, sunglasses, light-responsive lenses, blue-light-filtering lenses, non-prescription lenses, and contact lenses. It also provides accessories, such as cases, lenses kit with anti-fog spray, pouches, and anti-fog lens spray through its retail stores, website, and mobile apps. In addition, the company offers eye exams and vision tests. Warby Parker Inc. was incorporated in 2009 and is headquartered in New York, New York.